Life continues to look bleak for many individuals and families in the UK with new figures revealing the cost of living is increasing quicker than earnings, Clear Property Investment has learned.

Figures compiled by Oxford Economics for Sky show Britain is undergoing the toughest economic climate since the end of the last recession in the 1980s.

Meanwhile, another study, this time by the Office of National Statistics - on retail trends - showed high street spending fell in August, for the first time since the start of the year.

The Oxford Economics study considered factors such as inflation, benefits, wage rises and how much the government itself is spending.  The last factor is particularly relevant with tough public sector cuts due to the hit the country over the next three years.

Andrew Goodwin, is Oxford Economic's senior economist. He said: "The index fell for the nineteenth successive month in August, further increasing the squeeze on households.

"We are continuing to see inflation comfortably outstripping growth in wages, which is heavily eating into consumers' spending power."

Mr Goodwin's predictions didn't get any more optimistic, adding that he expected the situation to worsen over the coming months, particularly with local authority cuts.

"The impact of the public sector cuts has barely shown up in the index so far," he said. "Meanwhile the pattern of high inflation and low earnings is likely to be with us for some time to come.

"January's VAT rise is likely to keep inflation well above the 2% target, while the threat of further increases in unemployment will continue to push down on wages.

"Household finances have been under strain for some time now and there is no prospect of any let up in the near future."

The drop in retail sales by 0.5 per cent in August meanwhile increased fears of a double-dip recession.

Economists had been encouraged after a mini-peak during the Spring which showed rising manufacturing output, good retail figures and falling unemployment. The latest figures however are less encouraging while a CBI industrial trends survey added to the mood with a drop in manufacturers' order books - although demand is considered better than in the first six months of 2010.

CBI chief economic advisor Ian McCafferty said: "For the second month running, however, inflationary pressures appear to have picked up, as manufacturers anticipate a slightly faster rise in output prices over the next three months."

For further information on investing and the economy please contact any of our Clear Property Investment staff.

 

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